By Eric Olander | 10 October 2022
Nigeria’s Transportation Minister Mu’azu Sambo made a remarkable statement during a press conference on Friday. He is apparently still waiting for the China Exim Bank to come through with funding to build a pair of very expensive, multi-billion dollar railways.
Years ago, the Nigerian government and the bank agreed that China would finance 85% of the Abuja-Kano railway along with the Port-Harcourt to Maiduguri line. Since then, the Chinese haven’t explicitly backed out of the deal, but they’re basically ghosting the Nigerian government on the issue, refusing even to return their calls.
Now, I’m not sure if Minister Sambo is just ignorant about the current realities of Chinese railway financing in Africa or if he genuinely still thinks there’s a chance that the Exim Bank will wire him the cash. So, let me be as blunt as possible: it’s not going to happen.
Every data set that details the trajectory of Chinese infrastructure financing in Africa points in the same downward direction. The fact is, China just doesn’t have the appetite anymore to risk billions of dollars to build passenger railways in Africa, which will take decades to be repaid.
The other reality is that Nigeria is not well-positioned to repay new multi-billion Chinese loans even if the Exim Bank was willing to put up the money (which they’re not). Already, every naira of revenue collected by the government goes to servicing the country’s existing debts even as the debt continues to grow.
Then, even if the railway’s built, repayment is not assured given that terrorists can now easily derail it with a single attack, as what happened on the Abuja-Kano line earlier this year.
Sorry, Mr. Minister, China isn’t going to finance your railway. That era is over.
– Eric Olander
Comment:
Thank you Eric for your “royal bluntness” but the truth is that China has acted dishonourably. Even as recently as 2021, new deals were signed by Chinese entities to finance new railway projects such as the Port Harcourt- Maiduguri NGR reconstruction/rehab while it would appear that this so called “loss of appetite” had occurred much earlier.
Indeed China Exim had caused a rescoping of Lagos-Kano SGR from a 2,733 track km line to about 1,400 km for an aggregate higher cost which the FGN reluctantly accepted yet the monies have failed to materialise.
How about the Central line, Warri to Abuja in which Chinese entities signed up to fund and again balked when it came to putting their money where their mouth is or is it the Coastal line, Lagos-Calabar where they promised many billions and didn’t deliver even a sausage?
No doubt China jumped in feet first into Africa and too excitedly with its BRI, awash with its fresh mint and much drooling over Africa’s bountiful natural resources. It may have latterly realised that more effort was required in deal preparation and business planning.
However, pulling the plug mid stream on projects, as it has done in Nigeria, Kenya, Uganda, Ghana and a few others may hurt it in the long term.
Whoever thinks the “discerning” Europeans are not investing needs to “shine their eyes” as we say in Nigeria where Kano-Maradi SGR is being funded by European capital. Tanzania, Ethiopia, Egypt, Morocco and others are also sourcing railway .investments outside of China too. The scale may look like a trickle compared to the promise of FOCAC which may feel like a distant illusion now.
No doubt China will be back but perhaps not in time to suit Minister Sambo’s preference as his govt faces a rather testy election in a few months. Meantime African govts need to learn lessons from their experience and use the interregnum for some necessary housekeeping. Most are still only paying lip service to reform and are not creating the appropriate environment for private investment.